Poison Pills

Q What’s a “poison pill” in the business world? — H.L., Denver

A It’s a strategy, often labeled something like a “limited duration shareholder rights plan,” that companies occasionally employ to deter takeover attempts. The threat of it alone can be enough to send would-be acquirers packing.

As an example, in 2012, activist investor Carl Icahn bought up 9.98% of Netflix shares, apparently positioning himself to start calling for changes at the company.

Netflix responded by implementing a poison pill strategy that would be triggered once a single investor owned 10% of shares (or an institutional investor owned 20%). At that point, the company would flood the market with

additional shares, available at a discount to shareholders other than the would-be acquirer. That would have significantly diluted the value of Icahn’s shares. Icahn called the move “really reprehensible,” and later began selling many shares, abandoning his pursuit of Netflix.

Q Is it OK to have several IRA accounts? — B.B., Scappoose, Oregon

A Sure. You might invest some money in a traditional IRA and also have a Roth IRA. (They offer different tax benefits, with the former giving you an upfront tax break and the latter the possibility of tax-free withdrawals in retirement.) If you change jobs, you might take whatever 401(k) money you’ve accumulated and roll that into a new IRA account so that you can manage and invest that sum separately.

As long as you can keep track of the accounts, it’s fine. Note that the maximum IRA contribution in 2022 is $6,000, plus an additional $1,000 for those 50 and older. That’s a total maximum, so you

could park $3,000 in one IRA and $3,000 in another this year, but not $6,000 in each.